What is a reasonable loss for low risk investment

ivavoucher

Hi

Investment sum £230,000.
Current portfolio balance £210,000.

I am thinking now we should just have banked the money and the balance would have grown at a guaranteed 5% ish.
Obviously this option was discussed with our financial advisor.

We were advised after completing a few questionnaires that we were investing in very low risk.

What would be considered a reasonable loss on a low a risk investment over the last six months?

Is there a point where we would be correct in complaining about our losses?


Thanks for any opinions given.

ivavoucher

Bump in hope

dunstonh

Around 10-15% loss would be considered cautious. That would be after charges.

It really depends on the risk scale used. Personally I go by a 1-10 scale in my portfolios, some may go by more but most go by less. It also depends on the quality of the portfolio. A value of that amount should be arranged with around 10-15 funds. If its all in one or two funds then its not good investing (although not something that you can typically complain about).

Is there a point where we would be correct in complaining about our losses?

depends on how your attitude to risk was documented.

I am thinking now we should just have banked the money and the balance would have grown at a guaranteed 5% ish.

Not guaranteed as interest rates fluctuate and 5% is 4% after tax and 4% is lower than RPI so you are losing money in real terms.

Give us a little information about your investments (the funds you hold etc) and we can say if they are low risk or not.

si1503

As above. It depends where your portfolio is invested, investment weightings, diversification and so on. Also what time period is that over/when was the investment made?

On a whole not many equity related investment have fair too well of late - aside from mining stocks domestic-wise, and some emerging market sectors (South America,Africa...).

I have had investments drop a good 20% YTD, ideally you want to be out of stocks in a bear market (or at least not on the long-side), however things are starting to become a little more 2 sided again now aside from a few obvious sectors which still seem some way off a recovery. That said I would talk to your advisor before doing anything hasty.

purch

a low a risk investment over the last six months

Also depends on your definition of Low Risk

In the world of Financial Advice 'Low Risk' doesn't necessarily exclude Equity investment

I am sure that most members of the general public do not mean equity investment when they state their attitude as low risk.

If they did, and were properly informed of the risks we wouldn't get so many threads on this forum from people bemoaning 'small' portfolio losses in the current climate.

Clearly many people are having their 'hard earned' Invested in a way they neither understand nor have the risk appetite for.

Mr_Mumble

Hi ivavoucher, are you sure the reduction is due to investment loss rather than a mix of loss and initial fees (often around 5% if you haven't used a discounter/supermarket)?

You shouldn't be seeing an investment loss of more than 3% based on what you've said.

FTSE-100 is down 10.6% (about 9% after dividends) over the last 6 months.

The adviser (AFI & IMA) "cautious" (maximum of 60% in equities) indexes are down 4.8% & 4.9% in the past 6 months.

A "very low risk" portfolio as you describe should be defensive (maximum of 35% in equities). So, you shouldn't be seeing the 9% loss that you are.